New Ohio tax amnesty program offers savings to individuals, businesses

Consumers and businesses have an opportunity to catch a break and save some money through a new tax amnesty program in Ohio.

The program, which begins Jan. 1 and ends Feb. 15, allows individuals and businesses with unreported or underreported income to come clean with tax liabilities. If consumers and businesses pay all of those delinquent taxes, they will owe no penalty charges and only half of the interest charges they would normally be assessed.

The amnesty program was last offered in 2012.

It's important to note that not all delinquent taxes qualify for the amnesty program, Ohio Tax Commissioner Joe Testa said in an interview. If Ohio has already sent a bill to an individual or a business about unreported income or delinquent taxes, then those tax liabilities don't qualify for the amnesty program.

This program covers issues such as unfiled returns, unreported income or underreported income.

"Things can happen," Testa said. "People make mistakes."

Some of the mistakes can be honest ones, he said. Perhaps an individual forgets some 1099 income from a side job. Perhaps a business is a start-up without the best accounting and doesn't fully understand tax obligations. Perhaps an individual or business changes accountants and the new firm finds past errors.

The amnesty decision wasn't made by the Ohio Department of Taxation, Testa said; the state legislature approved it as part of the state budget. But Testa said he believes the concept is a good one for the state and for taxpayers.

From the state's perspective, it will spend about $1 million to market the amnesty program and expects to bring in $20 million to $25 million -- some of which may not otherwise be collected.

That's a really good return on investment, Testa said.

During the program in 2012, Ohio collected $30.5 million from 2,700 individuals and businesses. "From the state's standpoint, it's definitely worth it," he said.

From the perspective of taxpayers, "this gives them the opportunity to come forward at significant savings." Getting all penalties forgiven and owing only half the interest -- which could go back years -- could be huge.

"This is the cheapest way to get out from under it," Testa said.

And if consumers and business owners know they owe back taxes and have been stressing out about it for months or years, the value of clearing the slate may be massive.

The amnesty program includes the following taxes: individual income tax; school district income tax; employer withholding tax; employer withholding for school district income tax; pass-through entity tax; sales tax; use tax; commercial activity tax; financial institutions tax; cigarette and other tobacco products taxes; and alcoholic beverage taxes.

Only taxes that were due before May 1 are eligible for relief from penalties and interest.

Consumers, businesses and tax practitioners can go to a special web site, www.OhioTaxAmnesty.gov for more information about eligibility and requirements. Or they can find out more about eligibility by calling the Ohio Department of Taxation at 800-304-3211.